The International Monetary Fund is poised to embark on what analysts have described as "global quantitative easing" by printing billions of dollars worth of a global "super-currency" in an unprecedented new effort to address the economic crisis.

Alistair Darling and senior figures in the US Treasury have been encouraging the Fund to issue hundreds of billions of dollars worth of so-called Special Drawing Rights in the coming months as part of its campaign to prevent the recession from turning into a global depression.

Should the move, which is up for discussion by the summit of G20 finance ministers this weekend, be adopted, it will represent a global equivalent of the Bank of England's plan to pump extra cash into the UK economy.

However, economists warned that the scheme could cause a major swell of inflation around the world as the newly-created money filters through the system. The idea has been suggested by a number of key figures, including billionaire investor George Soros and US Treasury adviser Ted Truman.

Simon Johnson, former chief economist at the IMF, said: "The principle behind it is that everyone would get bonus dollars and instead of the Federal Reserve having to print them, everyone gets them.

"The objective is to create a windfall of cash. However if everybody goes out and spends the money it could be very inflationary."

March 20 (Bloomberg) -- Banks will need more than $750 billion in fresh capital from either the government or private investors to ensure their soundness and return to normal levels of lending, former Federal Reserve Chairman Alan Greenspan said.

Sources say toxic asset plan near completion
Sources: Geithner preparing plan to get toxic assets off banks' books with Fed and FDIC help

WASHINGTON (AP) -- Treasury Secretary Timothy Geithner could announce as soon as Monday his much-anticipated plan to get toxic assets off the books of the country's struggling banks, administration and industry officials said.

The plan will use the Federal Reserve and the Federal Deposit Insurance Corp. to make the resources of the government's $700 billion financial rescue fund go further, the officials said Friday.

Britain's economy revolved around banking. British banks hold about $4.4 trillion in foreign debt. The total size of the UK economy is $2.1 trillion. This year, the British government nationalized major parts of the UK's banking system. In total, the UK Treasury is on the hook for over $2 trillion in potential liabilities, according to an estimate by the Office of National Statistics.

But Britain is NOT going to be the world's biggest national bankruptcy. The government debt of the United Kingdom is only around $950 billion... or about $15,000 per capita.

This week, the United States Treasury sunk another $30 billion into AIG... its fourth bailout. It also put another $25 billion into Citigroup. The Treasury is now on the hook for as much as $6 trillion in liabilities. Last week, the White House produced its new budget. President Obama wants to run a deficit of $1.75 trillion in 2009.

The Treasury will pay for these bailouts by borrowing money. The Treasury borrows money by issuing Treasury bonds. Tomorrow, for example, it will auction three-year, 10-year, and 30-year bonds. This auction should raise around $60 billion.

The "debt clock" measures the amount of money the government owes its creditors. Today, the U.S. debt clock reads $11 trillion. To pay off this debt tomorrow, the government would have to collect $36,000 from every American.

But America is NOT about to be the world's biggest bankruptcy.

Of the major industrial economies in the world, Japan's government is the most indebted.

Since its recession began 20 years ago, Japan has plowed trillions into its banking system via numerous bailout programs. Japan's mantra is growth without cost. As a result, the Japanese government has built up the world's most crippling debt load.

The government of Japan owes $7.8 trillion. That's $157,000 per capita.

We've been using government debt per capita to compare the government debts of Britain, the United States, and Japan. But government debt to GDP is the ratio economists use to compare the indebtedness of countries. The UK has a government debt-to-GDP ratio of 48%. The U.S. has a government debt-to-GDP ratio of 75%. Japan has a government debt-to-GDP ratio of 187%.

If there's going to be a major sovereign bankruptcy, it's going to happen in Japan.Its economy is a shambles. For years, Japan has relied on exports... but even that's drying up now. In January, Japan's exports plunged 47%, producing a trade deficit. People talk about Japan as a "nation of savers." But that's not true anymore. Japan's personal savings rate has collapsed from 16% in the early 1990s to 2.2% last year.

Japan has an aging population and no immigration. I can't see where it's going to find the money to pay off its huge pile of debt.

The way to play the collapse in Japan is by shorting the yen. Right now, the Japanese yen is the world's most popular currency. Traders perceive it as a safe haven. In 2008, the yen was the world's best performing currency.... Rising 33% against the Canadian dollar, 40% against the British pound, and 19% against the dollar.

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

CANBERRA (Reuters) - Australian Prime Minister Kevin Rudd will push for China to have a more central role in the International Monetary Fund at an upcoming meeting of leaders from the world's 20 major economies, a report said on Monday.

Rudd, a China expert and fluent Mandarin speaker, would argue at a meeting of the G20 group of nations next month that China should be elevated within the IMF in an overhaul of the world economic order, the Australian newspaper said.

BEIJING -- China called for the creation of a new currency to eventually replace the dollar as the world's standard, proposing a sweeping overhaul of global finance that reflects developing nations' growing unhappiness with the U.S. role in the world economy.

The unusual proposal, made by central bank governor Zhou Xiaochuan in an essay released Monday in Beijing, is part of China's increasingly assertive approach to shaping the global response to the financial crisis.

The unmanned bombers that frequently cause unintended civilian casualties in Pakistan are a step toward an even more lethal generation of robotic hunters-killers that operate with limited, if any, human control.

The Defense Department is financing studies of autonomous, or self-governing, armed robots that could find and destroy targets on their own. On-board computer programs, not flesh-and-blood people, would decide whether to fire their weapons.

"The trend is clear: Warfare will continue and autonomous robots will ultimately be deployed in its conduct," Ronald Arkin, a robotics expert at the Georgia Institute of Technology in Atlanta, wrote in a study commissioned by the Army.

"The pressure of an increasing battlefield tempo is forcing autonomy further and further toward the point of robots making that final, lethal decision," he predicted. "The time available to make the decision to shoot or not to shoot is becoming too short for remote humans to make intelligent informed decisions."

Autonomous armed robotic systems probably will be operating by 2020, according to John Pike, an expert on defense and intelligence matters and the director of the security Web site GlobalSecurity.org in Washington.

This prospect alarms experts, who fear that machines will be unable to distinguish between legitimate targets and civilians in a war zone.

"We are sleepwalking into a brave new world where robots decide who, where and when to kill," said Noel Sharkey, an expert on robotics and artificial intelligence at the University of Sheffield, England.

As the shocking confidential information contained in this briefing shows, the threat of social meltdown and chaos is so large a domestic law-enforcement arm of the U.S. military (referred to by The Army Times as the "Consequence Management Response Force") has been created to deal with what U.S. officials believe to be a coming, unprecedented wave of massive social chaos.
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Yes, U.S. Officials Are Quietly Preparing for BIG Trouble Ahead
A new report by the Army War College's Strategic Studies Institute states flatly the U.S. military must prepare for "a violent, strategic dislocation inside the United States" that could be provoked by "unforeseen economic collapse" or "loss of functioning political and legal order."

Late last year, The Washington Post noted the incoming Obama Administration is going to "earmark" at least 20,000 troops returning from Iraq to deal with "domestic emergencies." Since then, the Army Times has broken the story that the domestic emergency army unit has been increased to 80,000 troops, who are being trained right now in Georgia.

In short, U.S. officials expect big trouble ahead — but they are not warning the general public about the danger (much less urge the unsuspecting masses to make basic preparations).

A rare critic of the government's keep-the-public-in-the-dark mentality is former head of the U.S. Commission on National Security, Stephen Flynn. He noted in a recent Wall Street Journal editorial: "Too many officials believe telling the truth to Americans about the risk would set off a nationwide panic. Thus, they keep us sheep in the dark for our own good."
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Dire Unemployment Picture Foreshadows Social Chaos

John Williams of the authoritative Shadow Government Statistics notes that unfudged, un-manipulated government statistics suggests a whopping civilian unemployment rate of 17% — with a projected total to exceed 30% (during the Great Depression, unemployment approached an historic 25%).

In the U.S., job-shedding has now exceeded post-World War II levels and the January 28 Wall Street Journal warned: "One troubling sign is that the states that were first into recession — those with a heavy concentration of home building and manufacturing — are getting worse, not better..."

In December, the International Monetary Fund's managing director Dominique Strauss-Kahn warned of riots and unrest sweeping through Western countries as lower-income households are beset with credit constraints and rampant unemployment. (Such riots have already caused the government of Iceland to fall and triggered riots in Greece.)

Today's Americans Don't Resemble the Hardy Depression-Era Generation

Not to be politically-incorrect, but the simple truth is millions of Americans who've never known anything but prosperity and easy-money have a militant expectation that society "owes" them something. And with so many families on the margins of survival already, the speed of the downward unemployment spiral is downright ominous (and unprecedented).

Worse, there are few signs the taxpayer dependents of today have any of the self-reliance skills that saw the hardy Great Depression generation through the tough times.
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The G20 moves the world a step closer to a global currencyThe world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity

A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.

"We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.

In effect, the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.

Dominique Strauss-Kahn, the managing director, said in February that the world was "already in Depression" and risked a slide into social disorder and military conflict unless political leaders resorted to massive stimulus.

He has not won everything he wanted. The spending plan was fudged. While Gordon Brown talked of $5 trillion in global stimulus by 2010, this is mostly made up of packages already under way.

But Mr Strauss-Kahn at least has resources fit for his own task. He will need them. The IMF is already bailing out Pakistan, Iceland, Latvia, Hungary, Ukraine, Belarus, Serbia, Bosnia and Romania. This week Mexico became the first G20 state to ask for help. It has secured a precautionary credit line of $47bn.

Gordon Brown said it took 15 years for the world to grasp the nettle after Great Crash in 1929. "This time I think people will agree that it has been different," he said.

There is now a world currency in waiting. In time, SDRs are likely evolve into a parking place for the foreign holdings of central banks, led by the People's Bank of China. Beijing's moves this week to offer $95bn in yuan currency swaps to developing economies show how fast China aims to break dollar dependence

It was not they (hedge funds - R.)who took on extreme debt leverage: it was the banks – up to 30 times in the US and nearer 60 times for some in Europe that used off-books "conduits" to increase their bets.

The key phrase is "new rules aimed at avoiding excessive leverage and forcing banks to put more money aside during good times." This is more or less what the authorities agreed after the Depression. Complacency chipped away at the rules as the decades passed. It is the human condition, and we can't change that.

AUSTIN – Gov. Rick Perry today joined state Rep. Brandon Creighton and sponsors of House Concurrent Resolution (HCR) 50 in support of states’ rights under the 10th Amendment to the U.S. Constitution.

“I believe that our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state,” Gov. Perry said. “That is why I am here today to express my unwavering support for efforts all across our country to reaffirm the states’ rights affirmed by the Tenth Amendment to the U.S. Constitution. I believe that returning to the letter and spirit of the U.S. Constitution and its essential 10th Amendment will free our state from undue regulations, and ultimately strengthen our Union.”

AUSTIN – Gov. Rick Perry today joined state Rep. Brandon Creighton and sponsors of House Concurrent Resolution (HCR) 50 in support of states’ rights under the 10th Amendment to the U.S. Constitution.

“I believe that our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state,” Gov. Perry said. “That is why I am here today to express my unwavering support for efforts all across our country to reaffirm the states’ rights affirmed by the Tenth Amendment to the U.S. Constitution. I believe that returning to the letter and spirit of the U.S. Constitution and its essential 10th Amendment will free our state from undue regulations, and ultimately strengthen our Union.”

Deutsche sees risk of U.S. GDP falling 10 pct in Q1
Wed Mar 4, 2009 11:51am EST
NEW YORK, March 4 (Reuters) - Deutsche Bank predicted there are risks that the U.S. economy could contract by as much as 10 percent in the first quarter, given the relentless wave of dismal economic data being reported in early 2009.

"However, the risks are skewed heavily on the downside, so we would not be surprised after revisions, if output end up being down closer to minus 10 percent," they wrote in a research note released on Wednesday.

While retail sales showed a surprise increase in January, news from other categories like business investment and inventories has suggested further economic deterioration since late 2008, according to LaVorgna and Riccadonna.

"We believe there is strong likelihood that growth will be significantly weaker this quarter," they wrote.

They forecast growth to return in the fourth quarter, roughly plus 1 percent, following a 2.8 percent drop in the second quarter and a flat reading in the third quarter.

However, even with a boost from the federal stimulus package, there is a chance that growth may not return in the second half of the year, they caution.